More Unwitting Renters Being Displaced By Foreclosures

Another story about tenants unwittingly renting homes that are in foreclosure comes from the Star Tribune (Minneapolis - St. Paul, Minnesota). The article reports:

• "[A] growing number of renters being displaced because their landlords are losing their investment properties to foreclosure. While there is no estimate of the number of renters being forced to move because their buildings are in foreclosure, workers on the front lines -- from foreclosure prevention counselors to tenants organizations -- say that starting last year, they began hearing from significantly more people caught in the foreclosure crossfire. The problem has been getting worse."

While the article is not clear on this point, it appears that the equity skimming (collecting rents from tenants while failing to make the mortgage payments) being perpetrated here is being done by the legitimate owners of investment properties who can't afford to keep their investments and, given that they have resigned themselves to losing the properties to foreclosure, have decided to "milk the property" of whatever rent they can get before losing the home to the bank without telling the unsuspecting tenants. It is becoming more common that, like the story of one tenant mentioned in the article, the tenant learns of the foreclosure when someone comes to their rented home and either hands them or attaches to the front door a legal notice ordering them to vacate the premises.

For more, see Foreclosures often lock out renters (Foreclosure doesn't always hurt only the person whose name is on the mortgage. More renters are turning to support agencies for help).

Postcript

As I have commented on before (and as crazy as it sounds), it may start becoming necessary for prospective tenants looking to rent private single family housing (homes, condos, etc.) to do a limited title search on the home being rented to assure themselves that (a) they are renting the property from the legitimate owner (and possibly not a "professional equity skimmer"), and (b) the property does not have a recent history of multiple sales (ie. possible house flipping scam) and is not the subject of a current foreclosure action (which in most jurisdictions, will be reflected by the existence of a recorded lis pendens or notice of default against the home in the office of the county property records).

For posts on other stories of tenants unwittingly renting homes in foreclosure, go here and go here, and go here. alpha